Why Haliburton Is Monday’s Big Earnings Loser

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Haliburton Co. (NYSE: HAL) released its second-quarter financial results before the markets opened on Monday. The company said that it had $0.58 in earnings per share (EPS) and $6.15 billion in revenue, compared with consensus estimates of $0.58 in EPS and revenue of $6.11 billion. The same period of last year reportedly had EPS of $0.23 and $4.96 billion in revenue.

Although earnings look to be in line, there are concerns about growing pipeline restraints in the Permain Basin. According to Reuters, Halliburton has said some of its customers are reducing activity and lowering their rig count as production in west Texas and New Mexico outpaces takeaway capacity. The bottlenecks have pushed the price of regional crude to a steep discount to benchmark U.S. oil and are threatening to dampen demand for oilfield services and equipment.

Back to earnings. In terms of its segments, Haliburton reported as follows:

  • Completion and Production revenue in the second quarter of 2018 was $4.2 billion, an increase of $357 million, or 9%, from the first quarter of 2018, while operating income was $669 million, an increase of $169 million, or 34%.
  • Drilling and Evaluation revenue in the second quarter of 2018 was $2.0 billion, an increase of $50 million, or 3%, from the first quarter of 2018, while operating income was $191 million, an increase of $3 million, or 2%.

The company issued no guidance, but the consensus estimates call for $0.68 in EPS and $6.38 billion in revenue for the quarter.

Jeff Miller, president and CEO, commented:

We executed on our plan and delivered strong results. We achieved total company revenue of $6.1 billion, representing a 7% increase, while operating income was $789 million, a 27% increase over adjusted operating income for the first quarter of 2018. Our overall strategy is working well and we plan to stay the course.

Shares of Haliburton were last seen down about 8% at $41.51, with a consensus analyst price target of $60.77 and a 52-week range of $38.18 to $57.86